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Unpacking the Budget Speech 2024

February 2023 Economic Review
| Market Forces

The National Budget Speech 2024 was delivered by Minister Enoch Godongwana on 21 February 2024. It is important for us, as established members of the financial services industry in South Africa, to remain informed and provide our clients with insight into our South African investment landscape, influenced by State spending. Join us in unpacking the Budget Speech 2024.

Commentary from Carmen Nel, Head of Multi-Asset, Terebinth Capital (Pty) Ltd


A summary of the 2024 National Budget Speech Insights by Arthur Kamp, Chief Economist at Sanlam Investments:

Debt trajectory: The government’s debt is expected to rise due to slow economic growth and increased spending demands, leading to significant revenue-raising measures targeting personal income taxpayers over the next three years.

Budget deficit: The main budget deficit for 2023/24 is worse than projected, aiming to reduce to -3.3% of GDP by 2026/27. While the debt trajectory is slightly lower than expected, challenges remain in stabilising it, possibly requiring a larger primary budget surplus.

Budget execution risk: High budget execution risk is a concern as previously identified spending risks materialise. The government wage bill increases while capital expenditure is reduced, impacting GDP positively. Social protection spending suggests the replacement of the Social Relief of Distress (SRD) grant.

Prudent use of reserves: The government plans to tap into reserves to ease near-term funding constraints, aiming to reduce new debt issuance rather than increase spending.

Revenue measures: Revenue-raising measures include the global minimum tax on companies and personal income tax adjustments, with no inflationary adjustments for tax brackets and rebates over the next three fiscal years.

Economic reforms: The analysis underscores the importance of economic reforms and lifting potential GDP growth to balance fiscal demands amid rising spending and slow revenue growth.

Overall, the 2024 Budget highlights the challenge of stabilising government debt amidst economic pressures, underscoring the need for prudent fiscal management and structural reforms to sustainably manage fiscal deficits and debt levels.

Click here to watch the full analysis of the 2024 National Budget Speech by Arthur Kamp.

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